Strategic Homebuying in 2025: Why Waiting for "Perfect" Rates Could Cost You in Sarasota's Market
As we move through the second quarter of 2025, I'm having the same conversation with potential homebuyers almost daily: "Dan, should I buy now, or wait for rates to drop further?"
It's a reasonable question. With conventional mortgage rates currently in the mid to high 6% range and FHA loans in the low 6% range, many potential Sarasota homebuyers are sitting on the sidelines, waiting for that magic moment when rates consistently hit the 5% mark.
But here's what I'm telling my clients—and what my 8+ years of experience in Sarasota's unique market has taught me: sometimes waiting for "perfect" conditions can end up costing you significantly more in the long run.
The Current Sarasota Market: More Active Than Headlines Suggest
Despite what you might be reading in the mainstream media, Sarasota's real estate market is active and healthy. Our first quarter of 2025 was remarkably strong, with properly priced homes moving quickly—often under contract in less than 30 days.
What we're experiencing isn't a slow market; it's a rational market. Properties priced appropriately for their condition, location, and features are selling steadily. The "slowdown" you might hear about primarily affects overpriced listings—essentially, sellers testing unrealistic values to see "if they stick." These eventually require price adjustments or sit on the market longer.
This creates a window of opportunity for strategic buyers who understand the bigger picture.
The Coming "Jump Off the Sidelines" Effect
Here's what I'm seeing on the horizon, and it's something savvy buyers should pay close attention to: there's currently a substantial pool of potential buyers waiting for rates to consistently reach the 5% range before making their move.
When this happens—and based on gradual improvements in inflation and monetary policy, it will happen—we're likely to see a significant surge in buyer activity. All those prospective homeowners who have been patiently waiting will enter the market simultaneously.
The result? A classic supply and demand scenario that will put upward pressure on home prices. In other words, while you might save on your interest rate by waiting, you could easily end up paying tens of thousands more for the same property.
The Strategic "Buy Now, Refinance Later" Approach
This market dynamic creates a compelling case for what I call the "buy now, refinance later" strategy. Here's how it works:
Purchase now while inventory selection is better and prices remain stable
Secure a mortgage at today's rates (mid-to-high 6% for conventional, low 6% for FHA)
Build equity through both monthly payments and potential property appreciation
Refinance when rates drop further, potentially within the next 12-18 months
This approach offers several strategic advantages:
1. Better Selection and Negotiating Power
With many buyers waiting on the sidelines, today's market offers better selection and negotiating leverage than we're likely to see once rates drop and competition intensifies. Sellers are more willing to consider contingencies, contribute to closing costs, or adjust prices—conditions that may disappear when multiple offers become common again.
2. Protection Against Future Price Increases
By purchasing now, you lock in today's prices. If the scenario I'm anticipating plays out, with a surge of buyers entering the market when rates drop to the 5% range, those who waited could face significantly higher purchase prices that offset—or even exceed—the savings from a lower interest rate.
3. Building Equity Sooner
Remember that old saying, "You're either building your own equity or someone else's"? Each month you wait is another month of paying rent instead of building equity in your own property. Even at today's interest rates, a portion of each mortgage payment goes toward principal, building your net worth with every payment.
4. The Refinance Option Never Expires
Perhaps most importantly, buying now doesn't prevent you from benefiting from future rate drops. When rates improve, you can refinance to secure those better terms while retaining the equity you've built and potentially benefiting from property appreciation in the interim.
A Real-World Example: The Math Behind the Strategy
Let's look at a specific example to illustrate this strategy:
Scenario A: Buy Now, Refinance Later
Purchase price today: $400,000
20% down payment: $80,000
Loan amount: $320,000
Interest rate: 6.5% (30-year fixed)
Monthly principal and interest: $2,022
After 18 months:
Remaining balance: approximately $310,000
Home value (assuming 5% appreciation): $420,000
Refinance to 5.25% rate (30-year fixed)
New monthly payment: approximately $1,713
Total savings over remaining loan term: approximately $108,000
Scenario B: Wait 18 Months for Lower Rates
Purchase price in 18 months (assuming 5% appreciation): $420,000
20% down payment: $84,000
Loan amount: $336,000
Interest rate: 5.25% (30-year fixed)
Monthly principal and interest: $1,856
Comparison:
Scenario A total cost (18 months at higher rate + refinanced loan): Initial 18 payments at $2,022 + refinance costs + remaining loan at $1,713
Scenario B total cost: All payments at $1,856
While Scenario B has a lower monthly payment than Scenario A's initial payment, you're ultimately financing a larger loan amount due to the price increase. Additionally, you've lost 18 months of equity building and will make mortgage payments for an additional 18 months at the end of the loan term.
Even with refinancing costs factored in, many Sarasota buyers would come out ahead with the "buy now, refinance later" approach, especially when considering the quality of home and neighborhood they can secure with less competition.
What About Market Volatility?
Yes, the market remains somewhat volatile. We saw this recently with the market reaction to the administration's tariff announcements, which temporarily impacted mortgage-backed securities. However, we've also seen remarkable resilience, with markets rebounding quickly.
While we can expect continued volatility throughout 2025, the overall trend for mortgage rates appears to be gradually improving. The key is not trying to time the market perfectly but making strategic decisions based on your personal circumstances and long-term goals.
When Waiting Makes Sense
To be clear, I'm not suggesting everyone should buy immediately regardless of circumstances. Waiting might make sense if:
You're not financially ready (insufficient down payment, unstable employment, credit issues that could be improved)
You have very specific neighborhood or property requirements that aren't currently available
You're planning a major life change within the next 2-3 years that would necessitate selling
You absolutely cannot make the monthly payment work at current rates
The Importance of Local Expertise
National headlines about the housing market often miss the nuances of local conditions. Sarasota's market has its own dynamics, influenced by our unique status as both a retirement destination and a growing community for young professionals and families.
This is why it's crucial to work with local professionals who understand these specific market conditions rather than relying solely on national trends or clickbait headlines designed to generate fear or unrealistic expectations.
Setting Up for Success: The Strike Price Strategy
For those who decide waiting is the right approach, I recommend what I call a "strike price" strategy. Here's how it works:
Complete your pre-approval process now
Identify your "trigger rate"—the point at which you're ready to move forward
Set up alerts and stay in regular contact with your mortgage professional
Be prepared to act quickly when your target rate becomes available
This approach ensures you're ready to capitalize on favorable rate windows, which may be brief in a volatile market. By having your documentation and pre-approval in place, you can lock in an advantageous rate when it appears, rather than scrambling to complete paperwork while rates potentially move back up.
The Bottom Line for Sarasota Homebuyers
The "perfect" time to buy a home isn't when rates reach some magical number—it's when you find a home you love, in a neighborhood you want to live in, at a price you can afford, with monthly payments that fit your budget.
Current market conditions in Sarasota offer a strategic opportunity for buyers who understand that real estate is a long-term investment. With less competition, better selection, stable prices, and the ever-present option to refinance when rates improve, the case for buying now rather than waiting is compelling for many.
Remember: you marry the house, but you only date the rate. Finding the right home for your family in the right location is the part that truly matters for your long-term happiness and financial well-being.
At Stenham Lending, we're committed to helping you navigate these complex decisions with personalized guidance based on your specific situation. Whether you're ready to move forward now or wanting to develop a strategic plan for when conditions align with your goals, we're here to help every step of the way.
If you'd like to discuss your specific situation or learn more about our "strike price" strategy to capitalize on rate improvements, reach out anytime. Let's work together to turn your homeownership dreams into reality in beautiful Sarasota.
Dan Stenham (NMLS: 1598005) | Lending Spot (NMLS: 2463121)
